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If you ask people working in the UAE's real estate sector how 2014 has been, most will say that they are satisfied with the way things have gone.
It has certainly been an exciting 12 months. With growth soaring in 2013, last year had to live up to high expectations, which it did. The third quarter in Dubai saw prices for apartments go up 31 per cent year-on-year and villas rise 17 per cent for the same period. In Abu Dhabi, the year-on-year increase for residential property prices was 30 per cent. The rate of acceleration might not be comparable to 2013, where in November alone apartment prices rocketed by an average 21 per cent, but figures show that growth has continued.
However, it wasn't all smooth sailing in 2014. At the beginning of the year, following the surge of 2013, the IMF issued a warning about the possibility of another property bubble in the UAE, mirroring that of 2008. Mortgage caps introduced by the UAE Central Bank and the increase in transaction fees from 2 per cent to 4 per cent by the Dubai Land Department helped slow things down to a manageable level.
There was also a blip in the middle of the year, from the second quarter to the third quarter, which was attributed to supply and demand levelling out (many new projects came to fruition providing more choice in the marketplace); the introduction of mortgage caps and higher transaction fees; and the notion that the market in the region is reaching a level of maturity with yearly patterns starting to emerge — in this instance, the vacation period and Ramadan impacting sales and rentals.
This was felt more in Dubai, less so in Abu Dhabi where there is still a lag between supply and demand. Experts predict that it will be the case for the next three years for the UAE's capital, which paves the way for continued growth.
The question, though, is: growth at what rate? Frantic and surging as in 2013, or with brakes being gently applied as in 2014, effectively continuing from where the past 12 months have left off? Alternatively, will the past year be as good as it gets?
The last scenario seems highly unlikely. The UAE as a whole is an increasingly attractive place for investors and developers. Dawood Al Shezawi, CEO of Strategic Marketing and Exhibitions, organisers of the International Property Show 2015, says, ''The maturity and stability of the Dubai real estate sector are certain to attract buyers and investors.''
With ever-improving infrastructure, strong economy and business links, as well as the image of a safe haven in the Middle East, there is no reason to suppose the UAE market won't continue to climb. In Dubai's case, of course, there is the small matter of Expo 2020.
I believe the Expo is going to be huge for Dubai and the UAE, and this year is when the real activity will kick off. We are likely to see more developments being unveiled through the year, in addition to the 27 announced at Cityscape a few months ago. Interest in Dubai's real estate will continue to increase.
Interest in new areas
This will mean an accompanying awareness of places that have not, so far, been considered the most popular. People are no longer looking predominantly at established favourites, such as Dubai Marina and JBR. They're looking beyond, at places such as Mirdif. Sherwoods' new development, the Mirdif Tulip, sold all of its apartments within a couple of months. This trend is set to continue into 2015.
And what about these lingering fears of a repeat of the 2008 bubble?
The consensus seems to be that such a scenario will not recur — people have learnt, the industry has learnt and the market has matured. In addition, Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Dubai's Supreme Fiscal Committee, has been quoted as saying that the government is ''on alert against volatility in the real estate market'', suggesting that the authorities are keeping a close watch.
The predominant sentiment is that 2015 will continue to be a growth period, albeit at a more measured pace. The outlook is rosy, but we shouldn't get too excited.
Although there is a lot to feel good about, as an industry we shouldn't get carried away and lose our focus. We've learnt a lot in the past few years and we will do well to keep those lessons in mind as we forge ahead.
Did you know that UAE realty adjusts to a subdued growth pattern
Source: Iseeb Rehman, Special to Property Weekly